Austin – Nearly 2,800 jobs will be lost in the Texas hospitality industry under a new House-passed tax on mixed drinks sold at restaurants, bars and nightclubs, according to an economic analysis conducted by the Distilled Spirits Council. “A tax on alcohol is a tax on Texas’ struggling hospitality industry,” said Texas-resident Dale Szyndrowski, Vice President of the Distilled Spirits Council. “Restaurants, hotels, tourism and conventions, and the small businesses and workers who depend on them, will pay the price for this hospitality tax. We estimate 2,800 Texans will lose their jobs -- waitresses, bartenders and bus boys.” In addition, Szyndrowski stated that Texas’ ability to attract convention and tourism business will suffer under the proposal. “On the one hand the legislators spend millions on subsidies to promote tourism, conventions and the hospitality industry, and then they slap it with more punitive hospitality taxes,” said Szyndrowski pointing to an analysis of major American cities showing that Dallas already has the highest hospitality taxes in the country. “It is counterproductive and economically harmful.” Under the House version of the school finance bill, a 7 percent sales tax would be applied to establishments that hold a permit to sell spirits, beer and wine such as restaurants, bars, nightclubs and hotels. These “mixed beverage” permit holders already pay a 14 percent gross receipts tax on all beverages sold -- unlike establishments that only serve beer and wine, which collect the sales tax. Currently, the direct tax on a typical mixed drink is $.76 -- one of the highest in the region. Adding an additional sales tax on mixed drinks would raise the total tax burden to $1.21 per drink. The price of a drink climbs 9 percent (the 7 percent state sales tax plus a typical 2 percent local add-on). Szyndrowski urged the legislature to treat all beverage licensees equitably and avoid punitive taxes that disadvantage certain restaurants, hotels and other businesses that are the backbone of Texas’ hospitality industry.
CONTACT: Frank Coleman or Lisa Hawkins
Telephone: 202-682-8840
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